The recent failure of First Republic Bank, marking the fourth U.S. bank collapse this year, has raised concerns among analysts regarding the potential impact on both the U.S. and global economies. Despite President Joe Biden’s assurances of a secure banking system, some exp...
The recent failure of First Republic Bank, marking the fourth U.S. bank collapse this year, has raised concerns among analysts regarding the potential impact on both the U.S. and global economies. Despite President Joe Biden’s assurances of a secure banking system, some experts believe this latest failure may signal systemic weaknesses in the country’s financial sector.
Beijing investment manager anticipates further bank failures
US Federal Reserve policies scrutinized
Many analysts attribute the bank failures to the U.S. Federal Reserve’s hawkish policies, which have led to consistent interest rate increases to achieve a 2% inflation rate since last year. Piskorski explains that the crisis is primarily driven by the Fed’s interest rate hikes.
Gao Lingyun from the Chinese Academy of Social Sciences in Beijing suggests that the U.S. government may face a dilemma in managing interest rates while also considering the effects on loan values and the risk of default. Gao warns these factors could contribute to a future recession and additional bank failures in other countries.